For now, our default should be that Federal Reserve Chairman Ben Bernanke shares the view that the real benefits of QE outweigh the imaginary costs. As long is that is true, then Williams will be correct - expect asset purchases to continue at the current pace deep into this year. What we are looking for, then, are signs that Bernanke's commitment is wavering as much as that of some of his colleagues.
Today it was leaked (via Bloomberg):
Federal Reserve Chairman Ben S. Bernanke minimized concerns that the central bank’s easy monetary policy has spawned economically-risky asset bubbles in comments at a meeting with dealers and investors this month, according to three people with knowledge of the discussions.
The people, who asked not to be identified because the talks were private, said Bernanke made the remarks at a meeting in early February with the Treasury Borrowing Advisory Committee. Fed spokeswoman Michelle Smith declined to comment.
The Fed chairman brushed off the risks of asset bubbles in response to a presentation on the subject from the group, one person said. Among the concerns raised, according to this person, were rising farmland prices and the growth of mortgage real estate investment trusts. Falling yields on speculative- grade bonds also were mentioned as a potential concern, two people said.
So, for now at least, it appears that Bernanke dismisses one of the oft-discussed risks of the current stance of monetary policy, that of investors "reaching for yield."